Savings
2024-05-14 34 Min read
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When it comes to making an investment, a lot of investors have clear expectations. This clarity allows them to make better decisions faster. In some cases, however, the expectations are higher. You may want to invest in a single product but also expect it to offer a number of benefits. If you are looking for life coverage and also want to get some good returns, then you can surely consider ULIPs. While ULIPS offer the dual benefits of insurance and investment, as an investor, you need to carefully select the strategy that you are going to follow when you choose a ULIP.
One of the best ULIP policies in India is SUD e-Wealth Royale. A non-participating policy, this ULIP insurance offers you life coverage along with wealth creation. The e-Wealth Royale allows you to choose from 2 investment strategies: a self-managed investment strategy and an age-based investment strategy. This is a crucial choice that has to be made at the time of policy purchase. You need to understand both strategies so that you are in a position to make a well-informed decision. Let us take a look at both these strategies and then do an in-depth analysis of the self-managed investment strategy.
Age-based investment strategy
As the name suggests, in the age-based investment strategy, the asset allocation of your ULIP plan funds is based on your age. The idea here is to gradually decrease your exposure to risky investments as you age. At the time of policy purchase, you inform the insurer about your risk appetite, and accordingly, your investments are distributed between two funds, Blue Chip Equity Fund and Gilt Fund. As you move on from one age group to another, the funds are re-distributed.
Self-managed investment strategy
The self-managed investment strategy, as the name suggests, is majorly managed by you, the policyholder. Here, you have the flexibility to choose funds of your choice and invest your money proportionately in those funds. There are 8 fund options that you can choose from:
1.Blue chip equity fund
2.Growth plus fund
3.Balanced plus fund
4.Income fund
5.Mid-Cap fund
6.Gilt fund
7.Dynamic fund
8.Money market fund.
1.Blue chip equity fund
2.Growth plus fund
3.Balanced plus fund
4.Income fund
5.Mid-Cap fund
6.Gilt fund
7.Dynamic fund
8.Money market fund.
Mastering self-managed investment strategy
The self-managed investment strategy allows you to be in control of your investments. You have the freedom to tailor your investment allocations, allowing you to align your choices with your risk appetite and long-term financial goals. This customisable approach empowers you as an investor to diversify your portfolio within a single financial product according to your comfort level and investment objectives.
However, when you are responsible for the management of your policy, it becomes your responsibility to have a balanced approach to seeking growth and security in the ULIP policy. This is where you need a clear understanding of investment objectives, risk tolerance, and managing fund allocations actively. When you follow the self-managed strategy, it will require continual monitoring of market conditions, evaluating fund performance, and periodically rebalancing the portfolio to align with changing goals.
Successful mastery involves staying aware, making informed decisions, and adapting strategies to optimise ULIPs for long-term financial growth and insurance coverage. Keep in mind these tips on fund selection, asset allocation, and risk management.
1.Understand the type of ULIP and the fund options
The very first juncture will be choosing the right ULIP plan. With SUD e-Wealth Royale, you have 2 plan options: Platinum and Platinum Plus. According to your plan, the further investment path will be decided. You would know by now that ULIP investment gives you the option to invest in equity funds, debt funds, or a mixture of both.
Equity funds have higher returns and higher risks, while debt funds are low on risk with comparatively lower returns. It becomes easier to decide on the ULIP type when you set the goal of your investment. So, choose once you have understood the workings of different ULIP funds and the risk involved.
2.Assess your goals and invest in what you need
Usually, people invest in ULIPs with a certain financial goal for the future. It may be an upcoming business plan, your child’s wedding, a gift to your spouse, and so on. Laying out the ULIP plan becomes more practical when you know the end goal of the investment. Depending on your future needs, you can choose the amount to be invested and the investment funds.
3.Invest for a longer tenure
ULIPs are a matter of patient investment. As per the rules of IRDAI (Insurance Regulatory and Development Authority of India), ULIPs have a lock-in period of 5 years before which you cannot withdraw the invested amount. It is ideal to remain invested for a long term to reap the best returns on ULIPs.
4.Avoid putting all your eggs in one basket
Creating an investment portfolio can be a great choice. While planning your ULIP, you do not have to necessarily invest all your capital in one fund. For example, with SUD e-Wealth Royale, you can choose from 8 different fund options You may choose to invest some amount in equity, a particular amount in debt or a mixture of both. In this case, you can stabilise your investments through market fluctuations.
5.Learn the art of fund-switching
Fund-switching is the essential art that can save your funds from experiencing the effects of a bearish market. You are the controller of your ULIP investment, which gives you the freedom to switch your funds at your will. If you doubt the performance of your chosen fund or other funds are expected to perform better, you can switch the fund. In ULIPs, there is no tax implications when you switch your funds from equity to debt or vice versa. With SUD’s e-Wealth Royale, you get up to 12 free switches in one policy year.
6.Put your premium payment on auto mode
Missing out on premium payments can be a bad move. If you choose a limited/ regular premium pay option, it will be better to go for auto premium payment mode. It keeps you off the burden of premium payment on time and the effects of late premium payment on the fund’s performance.
7.Keep an eye on the market
Vigilantly monitoring your investments remains crucial for your financial well-being. Regularly assessing market trends, reviewing your portfolio’s performance, and aligning strategies with your evolving goals ensures informed decision-making. Staying proactive can empower you, as an investor, to adapt to market shifts and make timely adjustments for optimal investment outcomes.
8.Withdraw systematically
After the 5-year lock-in period is over, you may withdraw funds from your ULIP plans. However, taking out a major chunk of the amount can lower your return rates to a great extent. So, try to withdraw systematically, that too when very necessary, so you still hold the stand of making sufficient returns with the remaining funds.
9.Make the most of the tax benefits
You may know that ULIPs, like various other investments, offer tax benefits. So, you must not miss out on this heavy benefit. Under Section 80C of the Income Tax Act of 1961, you can avail tax deductions of up to INR 1.5 lakhs. Apart from this, the death benefit under ULIP can remain tax-free under Section 10 (10D) of the Income Tax Act of 1961.
For policies purchased before February 1, 2021, the maturity benefit would remain tax-free, provided the premium is up to 10% of the sum assured. For policies purchased after February 1, 2021, the maturity benefit will be tax-free if the premium paid is below INR 2.5 lakhs. If your annual premium is above INR 2.5 lakhs, the payout will be taxable as per the rules of capital gains taxation.
10.Read the policy document carefully
Policy documents are the most essential part of the policy. Before you sign and agree to the terms of any ULIP policy, make sure to give it a thorough reading. It may not sound very entertaining, but is quintessential. In case you do not understand certain terms, you may ask your insurance provider on this matter. Move forward only when you know all about your chosen policy.
However, when you are responsible for the management of your policy, it becomes your responsibility to have a balanced approach to seeking growth and security in the ULIP policy. This is where you need a clear understanding of investment objectives, risk tolerance, and managing fund allocations actively. When you follow the self-managed strategy, it will require continual monitoring of market conditions, evaluating fund performance, and periodically rebalancing the portfolio to align with changing goals.
Successful mastery involves staying aware, making informed decisions, and adapting strategies to optimise ULIPs for long-term financial growth and insurance coverage. Keep in mind these tips on fund selection, asset allocation, and risk management.
1.Understand the type of ULIP and the fund options
The very first juncture will be choosing the right ULIP plan. With SUD e-Wealth Royale, you have 2 plan options: Platinum and Platinum Plus. According to your plan, the further investment path will be decided. You would know by now that ULIP investment gives you the option to invest in equity funds, debt funds, or a mixture of both.
Equity funds have higher returns and higher risks, while debt funds are low on risk with comparatively lower returns. It becomes easier to decide on the ULIP type when you set the goal of your investment. So, choose once you have understood the workings of different ULIP funds and the risk involved.
2.Assess your goals and invest in what you need
Usually, people invest in ULIPs with a certain financial goal for the future. It may be an upcoming business plan, your child’s wedding, a gift to your spouse, and so on. Laying out the ULIP plan becomes more practical when you know the end goal of the investment. Depending on your future needs, you can choose the amount to be invested and the investment funds.
3.Invest for a longer tenure
ULIPs are a matter of patient investment. As per the rules of IRDAI (Insurance Regulatory and Development Authority of India), ULIPs have a lock-in period of 5 years before which you cannot withdraw the invested amount. It is ideal to remain invested for a long term to reap the best returns on ULIPs.
4.Avoid putting all your eggs in one basket
Creating an investment portfolio can be a great choice. While planning your ULIP, you do not have to necessarily invest all your capital in one fund. For example, with SUD e-Wealth Royale, you can choose from 8 different fund options You may choose to invest some amount in equity, a particular amount in debt or a mixture of both. In this case, you can stabilise your investments through market fluctuations.
5.Learn the art of fund-switching
Fund-switching is the essential art that can save your funds from experiencing the effects of a bearish market. You are the controller of your ULIP investment, which gives you the freedom to switch your funds at your will. If you doubt the performance of your chosen fund or other funds are expected to perform better, you can switch the fund. In ULIPs, there is no tax implications when you switch your funds from equity to debt or vice versa. With SUD’s e-Wealth Royale, you get up to 12 free switches in one policy year.
6.Put your premium payment on auto mode
Missing out on premium payments can be a bad move. If you choose a limited/ regular premium pay option, it will be better to go for auto premium payment mode. It keeps you off the burden of premium payment on time and the effects of late premium payment on the fund’s performance.
7.Keep an eye on the market
Vigilantly monitoring your investments remains crucial for your financial well-being. Regularly assessing market trends, reviewing your portfolio’s performance, and aligning strategies with your evolving goals ensures informed decision-making. Staying proactive can empower you, as an investor, to adapt to market shifts and make timely adjustments for optimal investment outcomes.
8.Withdraw systematically
After the 5-year lock-in period is over, you may withdraw funds from your ULIP plans. However, taking out a major chunk of the amount can lower your return rates to a great extent. So, try to withdraw systematically, that too when very necessary, so you still hold the stand of making sufficient returns with the remaining funds.
9.Make the most of the tax benefits
You may know that ULIPs, like various other investments, offer tax benefits. So, you must not miss out on this heavy benefit. Under Section 80C of the Income Tax Act of 1961, you can avail tax deductions of up to INR 1.5 lakhs. Apart from this, the death benefit under ULIP can remain tax-free under Section 10 (10D) of the Income Tax Act of 1961.
For policies purchased before February 1, 2021, the maturity benefit would remain tax-free, provided the premium is up to 10% of the sum assured. For policies purchased after February 1, 2021, the maturity benefit will be tax-free if the premium paid is below INR 2.5 lakhs. If your annual premium is above INR 2.5 lakhs, the payout will be taxable as per the rules of capital gains taxation.
10.Read the policy document carefully
Policy documents are the most essential part of the policy. Before you sign and agree to the terms of any ULIP policy, make sure to give it a thorough reading. It may not sound very entertaining, but is quintessential. In case you do not understand certain terms, you may ask your insurance provider on this matter. Move forward only when you know all about your chosen policy.
Conclusion
When you choose the self-managed investment strategy, you get to be your own boss with your ULIP insurance plan. Know your future financial goals and the current risk appetite to choose the best ULIP plan in India. Once you sign the policy papers, make sure to have a careful eye on the market to know how it functions. When you have an idea of the functions of the market, you can decide if your chosen funds are sufficient or if you need to switch between them. Last but not least, the longer you stay invested in ULIPs, the higher your chances of better returns. Know the basics before you start investing.
Reference
1.https://www.edelweisstokio.in/blogs/ulip/the-power-of-ulips-how-they-can-help-build-your-financial-future
2.https://www.canarahsbclife.com/blog/ulip/6-equity-investment-strategies-in-ulip-for-long-term-growth
3.https://www.businesstoday.in/magazine/insurance/story/tips-to-invest-in-new-ulips-with-lower-cost-than-mf-charges-143685-2015-02-04
Reference: SUD Life e-Wealth Royale (UIN: 142L082V02)
2.https://www.canarahsbclife.com/blog/ulip/6-equity-investment-strategies-in-ulip-for-long-term-growth
3.https://www.businesstoday.in/magazine/insurance/story/tips-to-invest-in-new-ulips-with-lower-cost-than-mf-charges-143685-2015-02-04
Reference: SUD Life e-Wealth Royale (UIN: 142L082V02)
Disclaimer
1.Policy Administration charges are charged only for first 10 years and will be added back to the fund value at the end of 10th policy year and will continue to form part of the fund value. On maturity, the mortality charges deducted throughout policy term will be added to the fund value. These benefits are not applicable for surrendered or discontinued policies however it is applicable if the policy is Reduced Paid-up or is in the Revival period. Return of mortality charge will be excluding any extra mortality charge & GST/any other applicable tax levied on the mortality charges deducted as per prevailing tax laws.
2.Loyalty Addition will be added to the fund by way of creation of extra units and shall be equal to 0.10% of avg. fund value of last 12 months. The benefit will be added only if all due premiums under the policy are paid up to date and in case of revival, no addition will be made w.r.t past policy anniversary. The benefit also not payable post completion of PPT or surrendered or discontinued policies. Wealth Booster will be added to the fund by creation of extra units and shall be equal to 3% of avg. fund value of last 24 months. The benefit is not applicable for surrendered or discontinued policies.
3.Every additional switch will be charged ` 100/- per switch. This charge will be recovered by cancellation of appropriate number of units. Unused switches cannot be carried forward to future policy year(s).
4.Partial withdrawal are not allowed during the first 5 policy year or in case life assured is minor. It is allowed from 6th policy year or when life assured attains age 18 whichever is later. Partial Withdrawals will not be allowed which would result into termination of policy.
Unit Linked Life Insurance Products are different from the traditional insurance products and are subject to risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. The policyholder can withdraw the invested amount only after the completion of five plan years. Star Union Dai-ichi Life Insurance Company is the name of the Insurance Company and SUD Life e-Wealth Royale is only the name of the unit linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their prospects and returns.
SUD Life e-Wealth Royale | UIN: 142L082V02 | A Unit–Linked Non-Participating Individual Life Insurance Plan Star Union Dai-ichi Life Insurance Company Limited | IRDAI Regn. No: 142 | CIN: U66010MH2007PLC174472
Registered Office: 11th Floor, Vishwaroop I.T. Park, Plot No. 34, 35 & 38, Sector 30A of IIP, Vashi, Navi Mumbai – 400 703 | Contact No: +91 22 7196 6200 | 1800 266 8833 (Toll Free) | Timing: 9:00 am – 7:00 pm (Mon – Sat)| Email ID: customercare@sudlife.in | Visit: www.sudlife.in | For more details on risk factors, terms and conditions, please refer to the sales brochure carefully, before concluding the sale. |Trade-logo displayed belongs to M/s Bank of India, M/s Union Bank of India and M/s Dai-ichi Life International Holdings LLC and are being used by Star Union Dai-ichi Life Insurance Co. Ltd. under license.
2.Loyalty Addition will be added to the fund by way of creation of extra units and shall be equal to 0.10% of avg. fund value of last 12 months. The benefit will be added only if all due premiums under the policy are paid up to date and in case of revival, no addition will be made w.r.t past policy anniversary. The benefit also not payable post completion of PPT or surrendered or discontinued policies. Wealth Booster will be added to the fund by creation of extra units and shall be equal to 3% of avg. fund value of last 24 months. The benefit is not applicable for surrendered or discontinued policies.
3.Every additional switch will be charged ` 100/- per switch. This charge will be recovered by cancellation of appropriate number of units. Unused switches cannot be carried forward to future policy year(s).
4.Partial withdrawal are not allowed during the first 5 policy year or in case life assured is minor. It is allowed from 6th policy year or when life assured attains age 18 whichever is later. Partial Withdrawals will not be allowed which would result into termination of policy.
Unit Linked Life Insurance Products are different from the traditional insurance products and are subject to risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. The policyholder can withdraw the invested amount only after the completion of five plan years. Star Union Dai-ichi Life Insurance Company is the name of the Insurance Company and SUD Life e-Wealth Royale is only the name of the unit linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their prospects and returns.
SUD Life e-Wealth Royale | UIN: 142L082V02 | A Unit–Linked Non-Participating Individual Life Insurance Plan Star Union Dai-ichi Life Insurance Company Limited | IRDAI Regn. No: 142 | CIN: U66010MH2007PLC174472
Registered Office: 11th Floor, Vishwaroop I.T. Park, Plot No. 34, 35 & 38, Sector 30A of IIP, Vashi, Navi Mumbai – 400 703 | Contact No: +91 22 7196 6200 | 1800 266 8833 (Toll Free) | Timing: 9:00 am – 7:00 pm (Mon – Sat)| Email ID: customercare@sudlife.in | Visit: www.sudlife.in | For more details on risk factors, terms and conditions, please refer to the sales brochure carefully, before concluding the sale. |Trade-logo displayed belongs to M/s Bank of India, M/s Union Bank of India and M/s Dai-ichi Life International Holdings LLC and are being used by Star Union Dai-ichi Life Insurance Co. Ltd. under license.
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